NEW DELHI: A strong votary of self-help groups and micro finance institutions, Minister of State for Commerce Jairam Ramesh has opposed the Micro Finance Bill, saying it is not a "balanced law."

"I have expressed my reservations on the Bill, which has been referred to the Standing Committee on Finance, on the ground it may not be a balanced law," he said while speaking to newspersons after delivering the silver jubilee lecture at the Society for the Promotion of Wastelands here on Saturday.

Mr. Ramesh said the Bill did not give a role to markets, which could regulate the sector. According to estimates, there are over 800 micro finance institutions (MFIs) operating in India in various forms — trusts, societies, cooperatives and non-banking finance companies. The Bill seeks to control small micro-credit institutions through the National Bank for Agriculture and Rural Development.

Mr. Ramesh admitted that some MFIs were mired in controversy due to exploitative practices and lavish lifestyles of their promoters but still felt that the regulation of the industry would be driven by the market and the community rather than by legislation. The Minister praised the "gang of four" — Tamil Nadu, Karnataka, Kerala and Andhra Pradesh — for leading the country in self-help groups (SHGs), following which the movement picked up in West Bengal, Orissa and Assam.

Striking difference

Mr. Ramesh welcomed the entry of State governments in the SHG movement although conventional wisdom says such intervention could be the "kiss of death."

Taking the example of Andhra Pradesh, he pointed out that the difference in scale between governmental and NGO interventions was "striking" — Self Employed Women's Association took 35 years to mobilise 8 lakh women and the Dhan Foundation 17 years to reach a membership of 2.6 lakh women. By contrast, in Andhra Pradesh, 80 lakh women were mobilised in just 15 years.

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